OTTAWA - The federal budget watchdog says that creating a tax credit for local residents who regularly pay tolls on the Confederation Bridge would cost the treasury about $2.5 million a year in forgone tax revenue.

The parliamentary budget officer makes the estimate in a report released Wednesday that was sparked by Atlantic Canada politicians wondering why drivers in Montreal won't have to pay tolls for a new bridge, while tolls remain in place on the Confederation Bridge connecting Prince Edward Island to the mainland.

The Liberals say the new Champlain Bridge is a replacement for a bridge that doesn't have tolls; the Confederation Bridge was a new piece of infrastructure designed to have tolls when it was first opened.

That explanation doesn't sit well with some P.E.I. politicians, including Senate Liberal Percy Downe, who said the Champlain Bridge had tolls until they were removed more than 25 years ago. Downe asked the PBO to explore the cost of providing Islanders with a non-refundable tax credit, or reducing tolls on the Confederation Bridge.

Tolls could be reduced by about 46 per cent and still provide enough money to the bridge's private operator to cover maintenance costs through to 2097, when the Confederation Bridge turns 100, the report estimates. The current 35-year agreement with Strait Crossing Bridge Ltd. runs until 2032.

The budget watchdog says that in 2015, an estimated 730,000 trips across the Confederation Bridge were made by local residents raising an estimated $17 million in tolls.

Downe called it unfair to charge drivers a toll in one part of the country while not in another.

"It's the most expensive driving experience in Canada at $3.57 a kilometre," he said. "It's a major hindrance to trade and to tourism, so it's really a question of equal treatment."

The bridge is the only driving link between P.E.I. and the mainland and local residents have paid tolls — now set at about $46 a trip — since the bridge opened in 1997 and replaced ferry services promised in the deal that brought the province into Confederation.

Removing tolls entirely from the Confederation Bridge may not be possible. A briefing note prepared for officials at Transport Canada — the document doesn't identify who it is for — notes that there are no such provisions in the agreement with the bridge's private operator.

Under that deal, tolls on the Confederation Bridge can't increase by more than three-quarters of the rate of inflation, nor can an increase result in a net increase in toll revenues. Separate briefing material created for Transport Minister Marc Garneau says those provisions have meant that over time, the real cost to the travelling public has actually declined.

The Canadian Press obtained copies of the briefing materials under the Access to Information Act.

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News from © The Canadian Press, 2016